The next few blogs will attempt to explain pensions in simple terms or as near as possible, on the assumption that previous blogs were too difficult.
The nature of pensions, their aims and objectives, timescale, pension mechanics and implementation; many of these appear to have been lost, forgotten, ignored or just not understand, but all are important.
The nature of pensions is to save for retirement and old age, the aims and objectives to put money away to accumulate and grow into a personal pension pot large enough to give an adequate income to meet the needs and enjoy life after work.
The State forgot this many years ago, when they started using the savings from National Insurance contributions to pay existing pensioners in the pay as you go” unfunded schemes, which are a mis-use and abuse of members hard earned wages and savings.
The timescale is long, at least 40 years, the longer the better and the more affordable it becomes. The ideal time to start is when normal life in work has settled down and a regular income is being earned; the time scale between age 25 to 65 would appear to be a reasonable one.
The State pension has been the mainstay of those in work since the start of National Insurance for those in work to provide for unemployment, ill health and the time in old age after work is complete. Then the Welfare State steadily took over many of these functions, absorbing greater amounts of the money available.
Pensions became starved of money, their aims forgotten, any funds available were raided and distorted into the present unfunded system, annual increases failed to keep up with living costs until they fell below the poverty level. Even worse the minimum benefit level rose above basic pension level by almost a third.
To compound matters, the outdated eligible contribution year requirements were maintained resulting in less than half of females qualifying for full pension, although most males do. At basic full levels of £102 per week, reducing to £62 or less, all were forced into benefit.
The decline of pensions into poverty, with the resultant inadequacy, led to the growth of private schemes, at first as Company schemes on a defined benefit basis and then as personal ones on a defined contribution one. DB schemes guarantee the final pension outcome based on the numbers of years service i.e. contributions and final salary, DC schemes were subject to financial market fluctuations and therefore uncertain.
The State system has failed and will get worse as retired population increases take their toll, it is up to the individual to make provision for his own retirement future and demand a fair return for pension contributions
The next blogs will attempt to explain in simple terms how this might occur, dealing with basic mechanics of pensions, their implementation and needs, with the possible ways of achieving an adequate result.
Meanwhile a diversion, we are obsessed with time and speed, whether saving a few minutes by overtaking dangerously or in the new high speed train link, which was approved by a Common’s Committer this week.
At a cost of £34bn it will save 20, possibly 40 minutes off the London to Birmingham travel time, which will be wisely spent waiting to board the train or crossing London, or can be wasted, spent sitting for longer in a train. One could eat a good breakfast, use modern technology to read documents and mail, write reports, talk to the office, or otherwise sit back and enjoy the beautiful scenery as it passes by at a safe speed.
This modern high speed technology is supposed to improve rail travel and capacity, yet stopping distances increase rapidly with speed, at 200 miles an hour it is four times that at 100 mph, and four times the several miles of spacing between trains, a quarter of the capacity, needing dedicated lines and restricting other traffic.
Of course this investment will improve employment in Germany, losing jobs here. There must be better ways of spending this money, directly to promote growth, the Severn barrage to meet energy needs, or badly needed houses or even conventional railways and other transport means, which would improve capacity.
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